About the author

James Pethokoukis is a columnist and blogger at the American Enterprise Institute. Previously, he was the Washington columnist for Reuters Breakingviews, the opinion and commentary wing of Thomson Reuters.

The most important of Shinzo Abe’s three arrows

BTIG’s Dan Greenhaus has a great take on the third of Shinzo Abe’s three arrows: pro-growth, supple-side structural reforms. He points to Abe’s decision to participate in the Trans-Pacific Partnership as a positive sign. Abe also recognizes the need to increase female labor force participation. This, too: Becoming more entrepreneurial. Greenhaus (and see above chart):

Addressing entrenched issues related to corporations will be important for boosting productivity and reigniting entrepreneurship. One long cited issues is the generosity of credit guarantees which can run up to as much as ten years. Shortening the length of these guarantees would shift support away from existing businesses towards those that need credit to a greater degree, small enterprises and startups.

This is related to the ease of doing business in Japan. While on some measures, Japan does okay, on others it does not. In its most recent Doing Business report, the World Bank showed that Japan fares worse than the regional average (not to mention the Russian Federation) when it comes to the ease of starting a business. As the below charts show, Japan ranks worse than the regional average when it comes to the procedures in place necessary for starting a business as well as the time, measured in days, it takes to get up and running. Progress on this front would presumably increase productivity and efficiency and make Japan, over time, a better place for small business to grow.